AfriForum wants review of NPA decision not to seize Nova assets

Its decision is ‘irrational’ and to the ‘further detriment of the victims’ of Sharemax, says Adv Gerrie Nel.
Nova Property Group's offices. Image: Moneyweb

AfriForum wants to review the National Prosecuting Authority’s (NPA’s) decision not to seize the assets of the Nova Property Group, the rescue vehicle of the failed Sharemax investment scheme.

The case goes back nearly two years to June 2020, when AfriForum first asked the NPA to seize and freeze Nova’s remaining property assets because the civil rights organisation believed the properties were acquired with the proceeds of crime.

Read:
‘Sharemax investors screwed twice’ – Moneyweb
Afriforum asks the NPA to freeze Nova’s assets
NPA decides not to freeze Nova’s assets
Nova may be a bigger failure than Sharemax
Irba: Former Sharemax auditors’ review application ‘incompetent’ and ‘premature’

AfriForum based its assertion on the SA Reserve Bank’s ruling in 2010 that Sharemax’s financing model contravened the Banks Act, and this means the properties were acquired with the proceeds of crime.

Sharemax collapsed in 2012 after the Reserve Bank’s ruling, and the properties were transferred to Nova in terms of Section 311 Scheme of Arrangement (SoA), which tasked Nova with repaying investors.

However, the NPA responded that it regards the court-sanctioned SoA as legal, and there was no need to seize the assets. The NPA also stated that an independent legal opinion supported the decision not to prosecute.

Afriforum has now formally asked the NPA for a copy of this legal opinion and will consider it as part of taking a final decision to approach the courts to take the NPA’s decision on review.

If AfriForum takes the decision on review, a court will have to decide whether the NPA should seize Nova’s remaining assets and possibly prosecute the former directors and other individuals who may have been involved.

Strongly worded letter

In a strongly worded letter addressed to Advocate Ouma Rabaji-Rasethaba — the Deputy National Director of Public Prosecutions and head of the Asset Forfeiture Unit (AFU) — Advocate Gerrie Nel, AfriForum’s Private Prosecutions Unit head, labelled the NPA’s decision “irrational” and to the “further detriment of the victims who have suffered enormous financial losses due to the Sharemax debacle”.

“We share the disbelief of most investors that after a decade, the NPA/AFU has not taken any action against Sharemax,” wrote Nel.

“Investors are convinced that the NPA/AFU are wilfully reluctant to act against Sharemax and the company’s directors on a simple contravention of the Banks Act.”

He also said the NPA is basing its decision not to act on a report drafted by a senior counsel. “We want to see this report because the NPA – after more than a decade – has not only failed to prosecute but there has also not been repayment of the initial investment or dividends to the investors.”

Nova on the verge of financial collapse

However, a lot has changed since the initial correspondence between AfriForum and the NPA in 2020, and there may be very little for the NPA to seize and preserve.

Nova is on the verge of financial collapse. It received an adverse audit opinion for its most recent financial statements for the year to February 2021, which means the auditors do not believe the information contained in the financial statements is accurate.

Read:
Nova has sold more than half of its investment properties
Sharemax rescue vehicle faces CIPC shutdown
Auditor flags Nova’s ability to continue as a going concern for 3rd year in a row

The auditors also warned (for a fourth consecutive year) that Nova only keeps the doors open by selling the underlying properties to fund operational expenses.

According to Moneyweb’s calculations, Nova has sold more than half of the 31 unencumbered investment properties it inherited from Sharemax, with very little flowing back to investors as the SoA prescribes.

Nova’s failure was confirmed on January 20 this year when it did not repay investors in terms of the provisions in the SoA.

Read: Sharemax rescue vehicle makes a U-turn on payments to investors

Nel also raised this in a press statement. “The unit’s insistence on the obtainment of a preservation of property order is further highlighted by the fact that the board of directors of Nova on January 20 (the debenture repayment deadline) declined to redeem any debentures. One of the direct consequences of a preservation order is that no trading of properties is allowed until the court has granted a final order that it may be sold or returned to its rightful owners.”

CIPC is also taking action

However, the Companies and Intellectual Property Commission (CIPC) may beat AfriForum to the line, as it will soon decide whether to close Nova down and put it under administration. It has already issued Nova with two compliance notices and it is considering Nova’s second response as to why it should not be closed down.

The CIPC rejected Nova’s first response to show why it should not be closed down. It has responded to the second compliance notice, but the CIPC is yet to announce a decision. Moneyweb believes the CIPC is close to taking a final decision.

If Nova fails to make its case on the matter, the CIPC may shut its operations down and prohibit the sale of any more properties.

Neither the NPA nor Nova responded to questions before publication.

Read:
CIPC asks Nova to explain why it should not be closed down
Sharemax rescue vehicle races CIPC shutdown

AUTHOR PROFILE

COMMENTS   1

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

The rule of law is the first casualty of a socialist society. The ANC government has destroyed the capacity we had to enforce the law. With the law out of the way, they can plunder the national resources with impunity.

The Marxist theories of law: First, that law is the product of economic forces; secondly, law is considered to be the tool of the ruling class to maintain its powers over the working classes; finally, that law will wither away in the future communist society.

Socialism and oppression go hand in hand.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: